Bollywood Economy

Content • Bollywood• Indian economy• Economic aspects of Bollywood• Leading players in the industry• Economic growth of the industry in the last 5 years• Movies that contributed to the growth• Comparison with other regional movie industries• Impact of Bollywood on other industries• Reason for the high rate of investment into the industry• Impact of recession on the industry• Benefits to government• Conclusion

Bollywood

• Popularly known as Hindi film industry.• Based in Mumbai, Maharashtra.• Originated in 1913. • Term coined in 1970’s, inspired by Tollywood, the

Bengali film industry.• Often used to refer to the whole Indian film

industry.• Unlike Hollywood it does not have a physical

existence.

Indian film industry facts and figures

• Over 250 films are censored or released each year in Bollywood.

• Hindi film industry is the largest film industry in India, in terms of the ticket sales and the number of film produced annually.

• 20 million people go to movies on daily basis and pay the equivalent to average Indians days wages.

• The Central Board of Film Certification cites on its web site that every 3 months as audience as large as billions population visits cinema halls.

Indian Economy

Characteristics: Mixed economy.Both Govt. and private sector have influence over

the economy.Liberalized economy.Labour intensive.Low level of income and capital formation.Low order of resource utilization.

• Considered as a low income country by World Bank,

with the Gross National Income of US$549.

• Great inequality in the distribution of wealth: the richest tenth of households hold 33% of wealth, while the poorest tenth only hold 3%.

• 86% of the population lives under $2 per day; 44% lives under $1 per day.

India’s economic projections

• Source: report from Federation of Indian Chamber of Commerce and Industry, New Delhi dated September, 2010

2008 2009 2010

GDP growth 7.30% 5.40% 7.60%

CPI growth 9.30% 5.50% 4.90%

Economic aspects of Bollywood

• The Rs.130-billion ($2.85 billion) industry is one of the fast growing sectors in the country with expanding global reach.

• Approximately 250 movies are produced each year, ranging

from budget of $200,000 to $50,00,000.

• During the last decade, exports have grown from Rs.100 million ($2.18 million) to Rs.1.5 billion ($32.85 million).

• The industry is expected to grow at the rate of 19 percent and reach a turnover of over Rs.260 billion ($5.7 billion) by 2011.

• Provides employment to more than 1,75,000 people. Has employment generating capacity of nearly 35,000 per year.

• In the year 2009 , 27% of the money invested in the industry was from NRIs and it rose to 31% this year.

• Recently, the Govt has diluted the restrictions regarding FDI into the media and entertainment, which allows the NRIs to pool in funds into Bollywood.

• The industry makes an annual income of more than US$500 billion a year approximately.

• The industry is growing at the rate of 11.2% per year.

Leading Players in the industry

• Yashraj films• Red chillies production• Eros international• UTV Movies • Shree Ashtavinayak Cinevision Pvt. Ltd• Sheemaroo• Dharma productions• Kaleidoscope • Percept pictures• Bhandarkar productions

Yashraj Films

• Yash Chopra- MD• Aditya Chopra- CEO • Highest grosser in the entertainment business.• Collectively, 8 of the recent YRF productions have

grossed in excess of 200 Million US Dollars worldwide.• Produces almost 5 movies a year, budget ranging from 40 crores – 90 crores.• Employs more than 35000 people ranging from

technicians to junior artist and flimstars.

Red Chillies Production

• Owners – Shah Rukh Khan and Gauri Khan.• Recent collaboration with Dharma productions.• Also into advertisement and television industries.• Produces 3 movies on an average per year, ranging

from 30 crores– 75 crores.• Have earned a revenue of US$ 160 million from

USA, UK and UAE, in 2009-2010.• Employs nearly 19,000 people.

Eros International

• Owner - Komal Nahta • Have a strong hold on the overseas markets of USA

and UAE.• Produces 5 movies on an average each year, 10 crore – 50 crore .• Have earned a revenue of US$ 135 million from

USA and UAE, in 2009-2010.• Employs nearly 14,000 people on temporary basis.

Eros International

Year

Class of shares

Authorize-d capital

Issued capital

Paid up shares (no.)

Paid up face value

Paid up capital

2009-2010 Equity shares

125.00 71.41 7,14,07,000

10.00 71.41

UTV Movies

• Chairman –Naresh Chandra• Concentrates on only small and medium

budget films, ranging from 2.5 crores – 10 crores .

• Popular mostly in south- east Asia and UAE.• Have earned a revenue of US$ 105 million

from overseas trade, in 2009-2010.• Employs nearly 9,000 people .

Shree Ashtavinayak Cinevision Pvt. Ltd

• Chairman & MD- Dhilin H. Mehta• Board of directors –Ms.Seema D. Kar, Mr. Amit A. Behl,

Mr. Kiran B. Mistry.• Don’t have a strong hold on the overseas markets .

Popular mostly in south- east Asia.• Produces 5 movies on an average each year, 10 crores– 45 crores.• Have earned a revenue of US$ 95 million from overseas

trade, in 2009-2010.• Employs nearly 11,000 people on temporary basis.

Growth of the industry in the last 5 years, 2005-2010

Year No. of films produced

FDI Annual investment

Revenue earned

2006 284 11% m960 crore US$235 billion

2007 249 17% m840 crore US$340 billion

2008 273 20% m875 crore US$317 billion

2009 241 27% m985 crore US$475 billion

2010 235 31% m1060 crore ---------

Source- report from Research institute of media planning and management, August’2010

• Fastest growing industry in India.

• Contributes 29% to the growth of Indian economy.

• Expected to be the largest contributors of growth in India.

• Industry is attracting more and more FDI.

• Annual investment is increasing at a rapid rate.

Recent movies that added to the revenue of the industry

Top five highest-grossing Bollywood films in India

Rank Movie Year Studio(s)Net Gross

(according to BOI)

Net Gross(according to

IBOS)

1 3 Idiots 2009 Vinod Chopra Productions

Rs. 202,57,00,00

0

Rs. 189,38,74,72

9

2 Dabangg 2010 Arbaaz Khan Productions

Rs. 140,00,00,00

0

Rs. 142,48,31,00

0

3 Ghajini 2008 Geetha ArtsRs.

114,67,00,000

Rs. 117,48,22,75

6

4 Raajneeti 2010Prakash Jha

Productions/UTV Motion Pictures

Rs. 92,93,00,000

Rs. 94,89,66,316

5 Rab Ne Bana Di Jodi

2008 Yash Raj Films

Rs. 86,78,00,000

Rs. 73,52,37,848

Comparison with other regional movie industries

Other film industries in India• Tollywood (Bengali)• Tollywood (telugu)• Lolywood (lucknow)• Ollywood (orissa)• Kollywood (tamil nadu)• Sandalwood (kannada)• Bhojpuri film industry

Tollywood • The Bengali film industry.

• Approximately 160 movies are produced each year, ranging from budget of $20,000 to $3,00,000.

• Provides employment to more than 65,000 people. Has employment generating capacity of nearly 1500 per year.

• There has not been any contribution to the industry through FDI.

• The industry makes an annual income of more than

US$60 million a year approximately.

• The industry is growing at the rate of 7.2% per year.

• Annual income of the industry adds to only 4% of the growth of Indian economy.

Mollywood • The Malayalam film industry film industry.

• Approximately 90 movies are produced each year, ranging from budget of $200,000 to $50,00,000.

• Provides employment to more than 35,000 people. Has employment generating capacity of nearly 1100 per year.

• There has been contribution to the industry through FDI.

• The industry makes an annual income of more than

US$110 million a year approximately.

• The industry is growing at the rate of 6.4% per year.

• Annual income of the industry adds to only 7% of the growth of Indian economy.

Telugu film industry

• Approximately 100 movies are produced each year, ranging from budget of $70,000 to $9,00,000.

• Provides employment to more than 30,000 people. Has employment generating capacity of nearly 1000 per year approximately.

• There has been 11% contribution to the industry through FDI.

• The industry makes an annual income of more than

US$90 million a year approximately.

• The industry is growing at the rate of 7.8% per year.

• Annual income of the industry adds to only 3% of the growth of Indian economy.

Bhojpuri film industry

• Approximately 75 movies are produced each year, ranging from budget of $30,000 to $2,00,000.

• Provides employment to more than 32,000 people. Has employment generating capacity of nearly 1700 per year approximately.

• There has been no contribution to the industry through FDI.

• The industry makes an annual income of more than

US$15 million a year approximately.

• The industry is growing at the rate of 4.7% per year.

• Annual income of the industry adds to only 2% of the growth of Indian economy.

Ollywood

• Approximately 60 movies are produced each year, ranging from budget of $60,000 to $2,00,000.

• Provides employment to more than 15,000 people. Has employment generating capacity of nearly 2000 per year approximately.

• There has been no contribution to the industry through FDI.

• The industry makes an annual income of more than

US$9 million a year approximately.

• The industry is growing at the rate of 5.2% per year.

• Annual income of the industry adds to only 1.7% of the growth of Indian economy

Comparison with BollywoodNo. of films produced

Growth rate of the industry in %

Annual FDI in %

% of income added to Indian economy (approx.)

Bollywood 250 11.2 31 9.2

Tollywood 160 7.2 No 4

Ollywood 60 4.7 No 2

Telugu film industry

100 7.8 11 3

Bhojpuri 75 5.2 No 1.7

Mollywood 90 6.4 Yes 7

Comparison with Bollywood

bollywood

tollywood

ollywood

telugu film

bhojpuri film

mollywood

0

50

100

150

200

250

300

% of income added to in-dian economy

%growth rate of the industry

no. of films

Impact of Bollywood on other industries

Music industry• Almost 70% of the Indian music industry depends on Bollywood.

• Bollywood is responsible for pooling in almost 75% of revenue earned annually.

• The potential of the Indian music industry can be better understood from its size estimated at around US$ 182.9 million in 2010, up from US$ 160.9 million in 2008, portraying a growth of 14 per cent during the reporting period. It is expected to grow at a CAGR of 16 % over 2010-14 to reach US$ 379.1 million.

Media and advertisement

• The Indian Media and advertisement (M&A) industry stood at US$ 12.9 billion in 2009 registering a 1.4 per cent growth over last year.

• According to a joint report by KPMG and an industry chamber. Over the next five years, the industry is projected to grow at a compound annual growth rate (CAGR) of 13 per cent to reach the size of US$ 24.04 billion by 2014.

• The report stated. Additionally, the gaming segment is expected to be the fastest growing sector in the M&A industry. The sector showed a 22 per cent growth in 2009 and is expected to grow at a CAGR of 32 per cent to reach US$ 705.2 million by 2014

Other Industries

• Apparels industry• Disc producing• Prop industry• Tourism industry• Recreational industry• Television industry

• Less regulations in Foreign Direct Investment.

• Increased demand for the Bollywood movies in India as well as in abroad.

• Awesome turnovers from the recent movies.

• Withdrawal of recession.

Reason for the high rate of investment into the industry

Effect of recession on the industry

• The total revenue that Bollywood earned in 2008 was R10,900 crore with an overseas collection of r977 crore.

• The overseas box office also saw a major drop of 30 per cent with a cut down in the film going audience.

• KPMG has estimated that the domestic box office revenue in 2009 will be around R7,880 crore as compared to m 8.020 crore in 2008, thus bearing a loss of about a 100 crore

Consumer preferences

• Multiplex

• Theater

• Home viewing- DTH services & DVD, CDs copyright

• Internet , Pirated CDs

Government’s benefits from Bollywood

Entertainment tax

• One of the highest revenue earning sectors from tax in entertainment industry is cinema.

• The entertainment tax department collects the tax from the sponsors and deposit it to the Government of India.

• Entertainment tax in all states of India is 15%-20%, except Maharashtra and UP, where it is 25%-30%.

• The government receives 37% of the total entertainment tax from Bollywood.

Corporate tax from the production houses

• Indian government receives a corporate tax of 30% from the industry.

• If the taxable income is more than 1 million, a surcharge of 10% of income tax is levied on the company.

Contribution to GDP

• The present GDP rate is 7.60% and wants to attain 9% by 2010.

• The Bollywood industry added to 19% of the total GDP of the country in 2009 and is expected to contribute 22% of the GDP in 2010.

Conclusion

• Bollywood affects the Indian economy beyond limits. It’s proving itself to be ahead of the curve both politically and socially . It has pushed viewers to address issues of communal relations and religious intolerance within India. Bollywood has asserted itself as a popular vehicle for discussion , reflection and social change.

Reference

• http://www.sebi.gov.in/dp/ashtadraft.pdf• http://www.moneycontrol.com/financials/shr

eeashtavinayakcinevision/balance-sheet/SAC03

• http://www.bollywoodhungama.com/features/2008/11/14/4503/index.html

• http://filmistan.mywebdunia.com/2009/02/07/no_recession_in_bollywood.html

• http://business.mapsofindia.com/india-tax/corporate-rate.html

• http://www.economywatch.com/foreign-direct-investment/